Scout Business: New Rules

In the latest edition of The Knowledge, Google’s HR guru Laszlo Bock reveals a few secrets in work rules:

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It might surprise you to learn that Google, a company of more than 50,000 employees and counting, doesn’t have an HR department. Not in the traditional sense, anyway. The powers that be rebranded it in 2006, scrapping that most impersonal, reductive of terms, “human resources”, and putting in its place the far friendlier “people operations”.

Surprising, perhaps – but then Google has a long-standing reputation for putting its people first. In its founders’ letter of 2004, written to prospective shareholders in advance of the company’s initial public offering, Messrs Sergey Brin and Larry Page wrote that “our employees, who have named themselves Googlers, are everything… We have been lucky to recruit many creative, principled and hard-working stars. We hope to recruit many more in the future. We will reward and treat them well.”

These were no empty words. Google’s employees – the Googlers – enjoy a system of perks, privileges and benefits that has become the stuff of green-eyed water-cooler gossip around the world. Free food, free laundry, subsidised childcare, stock options as a basic right for every employee ­– not for nothing has Fortune magazine voted Google the best place to work for six years in a row.

According to the man who leads the department, though, the term “people operations” was less about Utopian, blue-sky thinking and more about, well, keeping the engineers happy. “Initially, the title was just window-dressing. It was intended to make the job sound more ‘techie’ than it actually was,” says Mr Laszlo Bock, the affable, energetic 43 year old who heads up the department charged with attracting, developing and retaining the talented individuals who keep the Google juggernaut in motion. “Over time, though,” he continues, “it has grown into something quite different.”

We meet at Google’s London HQ in an orange and glass cube called “carrot”, where the walls are decorated with pictures of carrots and the chairs are upholstered with carrot-coloured tweed. The floor is Astroturfed and illumination is provided by marine buoys strung up to the ceiling with brightly coloured rope. So far, so Googly. When visiting any of Google’s offices, of which there are now more than 70 around the world, it’s tempting to dwell on the superficial: the fantastical, Willy Wonka-style decorations, the fridges stocked with free food and drink, the yurts or decommissioned cable cars that dot the offices and act as informal meeting spaces. But the real action, you suspect, goes on under the hood.

What Mr Bock has done since being lured to Google’s Mountain View HQ in California from General Electric in 2006 is to turn Google’s fledgling HR department into a rigorous, highly analytical “self-replicating talent machine” – one that makes decisions based on hard data rather than gut instinct. “It’s the only way to keep false positives to a minimum,” he explains.

But while his data-driven methods are considered progressive, he insists that the underlying principles that govern Google’s People Operations team are not. “It’s important to remember that we’re not tearing up the rule book here,” says Mr Bock. “All we’re doing is using data to prove that a lot of this stuff we’ve been doing for a long time actually works, and to stop doing the stuff that we can’t prove works.”

In his new book, Work Rules!, which comes hot on the heels of Messrs Eric Schmidt and Jonathan Rosenberg’s How Google Works, Mr Bock lays down his own blueprint for a more Googly workplace. It was Google’s high profile, he explains, that convinced him to write the book in the first place. A self-confessed comic-book nerd, he is a strong advocate of the philosophy of Spider-Man’s Uncle Ben: with great power comes great responsibility. “We’re in a position of being able to reach and influence a lot of people,” he says. “If we believe we have something useful to say, then we’re obliged, I think, to say it.”

Read on to discover a few of the rules from his book – rules that he claims can be adapted to fit any company, of any size.

ACT LIKE A FOUNDER

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You don’t need the word Founder on your business card to adopt the same entrepreneurial outlook. “It is within anyone’s grasp to be the founder and culture creator of their own team,” writes Mr Bock, “whether you are the first employee or joining a company that has existed for decades.” How? It’s a question of attitude, of leading rather than following and, crucially, of believing that you have a stake in the future of your company and your team.

HIRE PEOPLE WHO ARE BETTER THAN YOU

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“Hiring is the most important people function you have,” claims Mr Bock. As such, it’s important that you get it right. That’s why Google spends twice as much on recruiting, as a percentage of its people budget, as an average company. It’s also why applicants are forced to endure a recruiting process that can be tortuously long. It’s worth the wait, though, writes Mr Bock, before going on to quote Mr Alan Eustace, Google’s recently retired SVP of knowledge, who has said that “a top-notch engineer is worth three hundred times or more than an average engineer”.

DON’T TRUST YOUR GUT

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Before a candidate becomes a Googler, he or she has her résumé screened by a dedicated recruiter. A phone interview or Google hang-out follows, during which the candidate’s general cognitive ability is assessed. The next stage involves an in-person interview with the hiring manager, peers, subordinates and a cross-functional interviewer. Feedback from all parties is compiled into a “hiring packet” that typically runs between 40 and 60 pages and is reviewed first by a hiring committee, then by a senior leader, and then, finally, by the CEO Mr Larry Page himself. It’s a process that takes around six weeks and relies heavily on data and the “wisdom of crowds”. But it is absolutely necessary to eliminate the kind of gut decisions that lead to poor hires. And, writes Mr Bock, it removes the need for new employees to feel as if they have to prove themselves: “There’s such faith in the quality of the hiring process that people join and on their first day are trusted and full members of their teams.”

TAKE CARE OF THE TWO TAILS

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If you don’t know what this means, then picture a graphical representation of employee performance. The two tails are at either end, representing your best and your worst employees, and it is with these two groups of people that your greatest opportunities lie. Google follows a policy of helping the worst performers – in this case, the bottom five per cent – by informing them that they are in the bottom tail. “That is not a fun conversation to have,” writes Mr Bock. But it gives them the encouragement to improve, and to find a role more suited to their skills. At the same time, the top performers should also be put under a microscope. “Every company has the seeds of its future success in its best people, yet most fail to study them closely,” writes Mr Bock. Find these people, identify their best qualities and find ways of reinforcing them.

PAY UNFAIRLY

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“Fairness is when pay is commensurate with contribution,” says Mr Bock. And contribution can vary hugely. Remember that employee performance graph we were talking about earlier? How many of you pictured a bell-shaped curve? “That’s an error,” writes Mr Bock. “Human performance in organisations follows a power-law distribution for most jobs.” This means that a small group of performers at the top end of the scale are far, far more productive than average. It may not seem fair to pay someone 10 times more than others on the same team, but, as Mr Bock argues, “if your best person is worth 10 of the average pay, then you must pay ‘unfairly’”.

MAKE LIFE EASIER FOR YOUR EMPLOYEES

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Google’s much-publicised employee perks have generated a lot of good press for the company and have helped turn it into one of the world’s most desirable places of work.  But it’s more than just a magnanimous gesture. “The majority of the perks we provide to employees are free, or of negligible cost to us,” says Mr Bock. And although they do shell out on things such as free food for all, the return in terms of employee happiness – and the subsequent improvement in productivity and innovation – makes it easily worth the money. “It’s also about being there for your employees when they’re in need,” Mr Bock continues. Hence generous maternity and paternity leave and added extras such as the $500 “baby-bonding bucks” that every Googler receives when they have a child.

~Mr Porter

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